NZ loan sharks ‘a real underbelly’
*Watch the interview in the vide player above*
New Zealand’s predatory lending practises are under the microscope. A recently-released Government discussion paper is proposing sweeping changes which could shut down mobile shopping trucks and payday lenders, and limit unreasonable borrowing fees.
As the public consider the possible changes, and report back through submissions, Newsroom speaks to one woman who has been at the forefront of addressing predatory lending practices.
“This is a real underbelly. This is ... on the edge of mafia-type stuff,” Ngā Tangata Microfinance director Claire Dale says.
Changes must be made to limit what people can be charged for loans and purchasing items on credit, she urges.
Ngā Tangata Microfinance specialises in offering micro loans to low-income people.
“Most civilised countries in the world ... have a total cost of credit cap,” Dale says. “In Australia it’s 48 percent, I think in the UK it’s 100 percent - even that is better than what we’ve got operating here.”
Earlier this year, Dale also highlighted the damage mobile shopping trucks were doing in communities. At the time, a Newsroom investigation found items like 3kg packs of chicken drumsticks were being sold for $59 - five times the cost at The Mad Butcher.
More recently, harm from fringe lenders and finance companies charging excessive interest rates – dubbed third-tier lenders – was examined. The loan shark practices trap people in debt cycle, Dale says.
“The lower your income the more regularly crisis hit – that’s just how it works,” she adds.
Read more: Banks blacklist mobile shopping trucks
Kiwibank is a partner of Ngā Tangata Microfinance, and a Foundation Partner of Newsroom.co.nz
Credible information is crucial in a crisis.
The pandemic is pushing us into an unknown and uncertain future. As the crisis unfolds the need for accurate, balanced and thorough reporting will be vital. Newsroom’s team of journalists is working hard to bring you the facts but, now more than ever, we need your support.
Reader donations are critical to what we do. If you can help us, please click the button to ensure we can continue to provide quality independent journalism you can trust.